Yes, for MNEs under GMT, these incentives may become ineffective unless a domestic top-up tax is applied.
In the age of tax globalization and digitalization, Indonesia is taking a decisive step toward aligning its tax regime with the OECD/G20 Inclusive Framework through the Global Minimum Tax Implementation in Indonesia. This bold move seeks to ensure that multinational enterprises (MNEs) pay a fair share of taxes—at a minimum effective rate of 15%—regardless of where they operate or where their headquarters are based.
But this isn’t just a regulatory update. It’s a paradigm shift that reshapes how tax incentives work, how profits are taxed across borders, and how companies make business decisions. For those doing business in Indonesia—or planning to—understanding the nuances of this tax transformation is no longer optional. It’s essential.
The GMT is part of the OECD’s two-pillar solution to BEPS (Base Erosion and Profit Shifting). Pillar Two introduces a global floor of 15% tax on MNEs with revenues above €750 million. The main goal is to prevent profit shifting to low or zero-tax jurisdictions and ensure taxation where economic activities occur.
These rules create a multi-jurisdictional safety net, reducing the incentive to shift profits to low-tax jurisdictions.
For years, jurisdictions competed for foreign investment by offering extremely low corporate tax rates. The GMT eliminates this strategy for MNEs and rebalances global tax competition.
Indonesia’s tax holidays, investment allowances, and SEZ regimes may no longer be effective for MNEs subject to the GMT. The value of such incentives will be eroded unless Indonesia restructures them to fit within the GMT framework.
READ MORE: New Tax Audit Procedures in Indonesia : Key Updates and Implications for Taxpayers
As a G20 member and one of Southeast Asia’s most dynamic economies, Indonesia plays a pivotal role in global tax discussions. The country has committed to implement the GMT no later than 2026, as publicly stated by the Ministry of Finance and the Fiscal Policy Agency.
The upcoming Omnibus Law on taxation will likely introduce key rules to enforce GMT, including:
The DGT will be the primary enforcement body, while BKF will coordinate Indonesia’s international tax policy and treaty negotiations. PMK (Ministry of Finance Regulations) will be used to operationalize rules.
Unless adjusted, these incentives may become ineffective for MNEs. For example, an MNE receiving a 0% tax rate under an SEZ may still need to pay a 15% top-up tax in another jurisdiction.
Indonesia is likely to introduce a Qualified Domestic Minimum Top-up Tax (QDMTT)—a mechanism that allows Indonesia to collect the top-up before foreign jurisdictions can. This protects tax revenue and maintains investor interest.
Without proper planning, MNEs may face double taxation, disputes over profit attribution, and costly audits across multiple jurisdictions.
GMT introduces complex reporting requirements, including GloBE Information Returns, ETR calculations, and detailed reconciliations—placing significant pressure on finance and tax departments.
Unclear definitions, evolving guidelines, and the lack of uniform international standards pose real challenges. Companies may need to revise their tax policies frequently.
Legal departments must engage in multijurisdictional risk analysis, litigation scenario planning, and advance rulings to minimize uncertainty.
READ MORE: New Beneficial Ownership Regulation in Indonesia 2025: What Businesses Must Know
An Indonesian subsidiary pays 5% tax under an SEZ. Its parent is based in Japan, where GMT is active. Japan will impose a 10% top-up tax under IIR unless Indonesia introduces QDMTT.
The tax revenue flows to Japan, not Indonesia. The incentive becomes ineffective, and Indonesia loses fiscal sovereignty unless proactive legal reforms are made.
Assign legal, tax, and compliance experts to assess exposure, plan structures, and liaise with authorities.
Ensure economic substance in low-tax jurisdictions, evaluate intercompany pricing, and consider restructuring to manage ETR.
We at Kusuma & Partners Law Firm have closely monitored the Global Minimum Tax Implementation in Indonesia and assisted clients in evaluating legal and tax impacts. We emphasize:
Our tax and legal teams can support from compliance planning to strategic restructuring to ensure full alignment with upcoming GMT obligations.
The Global Minimum Tax Implementation in Indonesia is not just another tax law—it’s a redefinition of global tax architecture. It’s the new reality for multinational companies, and Indonesia is aligning fast.
Need help navigating the complexities of the Global Minimum Tax Implementation in Indonesia? Contact Kusuma & Partners Law Firm today.
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“DISCLAIMER: This content is intended for general informational purposes only and should not be treated as legal advice. For professional advice, please consult with us.”
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